India: Building on Economic Momentum

India’s economy is gaining investor attention as the nation builds on strong macroeconomic fundamentals and structural reforms. Despite falling short of expectations, India’s FY’24 GDP growth of 6.6%¹ is relatively attractive to growth rates of other emerging markets countries. India’s growth is supported by strong domestic consumption, services sector, and high-value manufacturing exports​.² Indian equities soared for most of 2024, but experienced a short-term pull back following softer-than-expected GDP data in the fourth quarter.

Emerging markets equities are facing pricing pressures due to uncertainty over U.S. tariffs. However, Indian equities have been mostly immune to tariff-related volatility as the country’s growth is mainly a factor of domestic consumption and infrastructure spending. If anything, India stands to benefit from supply chain shifts out of China and Vietnam. We remain focused on the long-term structural growth of India as it marches on to become the world’s third-largest economy​.³ 

Indian Stocks Are Outpacing Their Emerging Markets Peers

Source: Morningstar Direct. Data as of March 31, 2025

Past performance is no guarantee of future results. Index performance is not representative of fund performance. It is not possible to invest directly in an index.

Monetary and Fiscal Policy Support

India’s GDP expansion of roughly 6% –7% outpaces peers, providing a tailwind for corporate earnings. Even as growth takes off, inflation has been brought under control, dipping to 3.6% in February which is within the central bank’s 4% target​ ceiling,⁴ giving the Reserve Bank of India (RBI) room to cut rates and support growth​.³ 

The government has orchestrated a delicate balance of fiscal prudence and growth-focused spending. After the pandemic, India embarked on fiscal consolidation – cutting the fiscal deficit from 9%+ of GDP to 5.9% in FY2023-24⁵– while sharply increasing capital investments. Notably, the FY23/24 budget hiked public capital expenditure by 33% to about $122 billion,⁶ an all-time high of ~3.3% of GDP. This hefty outlay, directed at infrastructure, housing, and manufacturing signals a shift from subsidies to long-term asset creation. By spending almost one-fifth of its budget on development projects, the government aims to crowd into private investment and sustain high growth​.⁷ Meanwhile, healthy tax revenues from the growing economy have kept public finances on a sustainable path, allowing India to invest in growth without jeopardizing stability.

Beyond supportive macro factors, multiple high-growth sectors are driving India’s economic momentum. Structural trends–from a burgeoning middle class to digital innovation and policy reforms–are propelling these industries and creating new investment opportunities.

Consumer Boom and Premiumization

India is undergoing a consumer boom, particularly in the premium segment. Rising incomes and urbanization have unleashed a new wave of discretionary spending. By 2030, India is projected to quadruple consumer spending from about $1.5 trillion to $6 trillion​ with domestic consumption doubling in size forecasted to reach 5 trillion​.⁶

The narrative is clear: an aspirational middle class is “trading up,” eager to spend on quality products and experiences. This trend bodes well for consumer-facing companies–from retailers and mall operators to auto makers and real estate developers catering to the upscale market. As India’s consumption story shifts from basic needs to premium indulgences, investors have a chance to ride a powerful wave of domestic demand growth.

Luxury real estate sales surged 50%+ in 2024,⁸ benefiting developers like Oberoi Realty.* Housing demand is now heavily tilted toward the luxury segment, with affluent buyers in major cities opting for premium housing, a trend that directly benefits Oberoi’s portfolio of upscale projects.⁹ 

Similarly, rising discretionary spending with global brands eager to cater to Indian consumers, is likely to benefit Phoenix Mills Ltd.* The company is India’s top mall developer and owns a portfolio of marquee shopping malls in major cities across the country. Phoenix’s high-end malls (often destinations for shopping, dining, and entertainment) are experiencing strong leasing demand and rental growth. Investors in Phoenix Mills gain from both steady rental income and the capital appreciation of prime retail real estate.

Digital Finance and Credit Access Expansion

The fintech revolution in India is in full swing, transforming how Indians save, borrow, pay, and invest. Over the past decade, the government’s “Digital India” initiative has dramatically expanded internet access¹⁰ and lowered e-KYC costs for financial institutions.¹¹ With almost 900 million internet users and cheap mobile data, India is now the world’s largest open market for digital services.¹² As a result, a vibrant ecosystem of digital platforms has emerged, offering everything from peer-to-peer payments and online lending to robo-advisory and insure-tech.

Expanded access to financial services is unlocking credit for underbanked segments, such as small merchants and rural entrepreneurs​. Cholamandalam Investment & Finance Company^* (CIFC) has been growing its loan book at a rapid pace, targeting 20%–25% annual growth in assets under management (AUM) as it finances vehicle purchases, home loans, and small business expansion​.¹³ With one of the widest branch networks among non-bank lenders, CIFC is poised to gain from rising consumption and underpenetrated credit in rural areas. Its asset quality remains healthy and capital position strong, positioning the firm to continue expanding credit access to India’s aspiring middle class.

Even traditional banks such as HDFC Bank Ltd (HDFC)^* are partnering with fintechs to co-create digital products.¹⁴ India’s largest private sector bank, HDFC, is a bellwether for the nation’s financial services and consumer economy. The bank continues to post solid growth even at scale – for the quarter ending December 2024, retail loans grew ~10% year-on-year and commercial/rural loans by ~11.5%​.¹⁵ With the recent merger of its parent HDFC Ltd (a housing finance giant), HDFC Bank has bolstered its balance sheet and product suite, especially in mortgages. This one-stop financial conglomerate is positioned to harness India’s rising income levels. For investors, HDFC Bank represents a stable, blue-chip exposure to India’s banking growth, known for its consistent execution, high asset quality, and steady profit growth.

Jio Financial Services Ltd.^* was demerged from Reliance Industries in 2023, leveraging the immense reach of Reliance’s telecom arm (Jio) to offer digital finance solutions. Jio Financial and BlackRock have agreed to a 50:50 joint venture with $300 million in initial investment to launch asset management services in India​.¹⁶ This venture will create a new platform for mutual funds and investment products targeting India’s growing retail investor base.

Beyond investments, the firm is expected to roll out consumer lending, insurance, and payments solutions integrated with Jio’s digital ecosystem (smartphone apps used by hundreds of millions). In essence, Jio Financial is building a fintech powerhouse that could disrupt traditional banks by offering low-cost, tech-enabled financial services to the masses.

Infrastructure and Urban Development Upswing

India is undergoing an infrastructure renaissance, pouring resources into highways, railways, ports, and urban development at an unprecedented scale. The government’s push is evident in budget allocations – capital investment outlays have hit record highs at $11.6 billion in FY24 (a 33% jump) to build the backbone of a modern economy​.¹⁷ Landmark projects like the Delhi-Mumbai Industrial Corridor, new freight rail corridors, and dozens of new airports are under execution, which will reduce logistics costs and spur industrial growth.

The infrastructure boom is not only adding to GDP directly but also enabling other industries (like e-commerce, logistics, manufacturing) to flourish on the back of improved facilities. This virtuous cycle of building and growth makes India’s infrastructure an attractive long-term investment theme. India’s largest integrated logistics and e-commerce fulfillment company, Delhivery Ltd^* is likely to benefit from India’s infrastructure and consumption boom. Delhivery provides parcel transportation, warehousing, and supply chain services to e-commerce players and merchants nationwide. The company’s volume and revenue are climbing steadily with its nationwide network and technology platform, Delhivery is positioned to capitalize on India’s e-commerce logistics market growth as more retailers outsource their logistics.¹⁸ 

India’s cables and wires sector is thriving on the back of strong domestic demand in real estate and infrastructure. As a manufacturer of cables & electrical wires, KEI Industries Ltd^* is benefiting from India’s infrastructure and power development projects. The company is witnessing high domestic and export demand, prompting a massive capacity expansion. KEI has planned a ₹18–19 billion ($210.5M - $222.2M) capital expenditure for a greenfield expansion that will boost its cable manufacturing capacity by 137%​.¹⁹ 

Green Energy and Manufacturing

India is spearheading one of the largest green energy and manufacturing transformations globally. The government aims to reach 500 GW of renewable energy capacity by 2030 (up from 125 GW today), with ambitious investments in solar, wind, battery storage, and green hydrogen. Manufacturing is also on a growth trajectory, with the “Make in India” initiative accelerating production in electronics, semiconductors, automotive, and specialty chemicals.

With a committed capital investment of $10 billion in clean energy, Reliance Industries^* stands at the crossroads of both megatrends. Reliance is building a 5,000-acre Green Energy Giga Complex to manufacture solar panels, energy storage, and hydrogen fuel technology. It plans to establish 100 GW of renewable capacity by 2030,²⁰ positioning itself as a leader in India’s energy transition. It plans to start manufacturing solar wafers inhouse by December 2025 and develop a local supply chain.

With government-backed incentives and massive industrial investments, India’s shift toward clean energy and advanced manufacturing presents a multi-decade investment opportunity. Reliance Industries possesses the scale and strategic positioning to capitalize on these opportunities.

India’s rapid expansion across consumer, fintech, infrastructure, and green energy sectors presents a compelling investment case. Companies positioned in these high-growth areas are set to benefit as India moves toward a $7.5T economy by 2031. Now is the time for investors to capitalize on India’s unfolding economic transformation.²¹ 

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